Bit of a wobbly night on Wall Street with no follow through from the more bullish returns from Friday although it initially started much higher. Confidence is lagging across risk markets as traders prepare for an action packed economic calendar this week with the USD also initially firming before losing ground against most of the majors, but everything remains in flux as we await the central bank decisions. European shares slumped again as the Australian dollar stayed just above the mid 65 cent level.
US Treasuries saw small yields drop all across the curve with the 10 year down 2 points to remain below the 4.2% level while oil prices dropped sharply again after their poor start to the trading week as Brent crude nearly finished below the $79USD per barrel level for a new monthly low. Meanwhile gold prices initially rebounded but failed on getting back above the $2400USD per ounce level.
Looking at markets from yesterday’s session in Asia, where mainland Chinese share markets are flat at best with the Shanghai Composite off by a handful of points while the Hang Seng Index is zooming higher, currently up nearly 1.7% to 17305 points.
The Hang Seng Index daily chart was starting to look more optimistic with price action bunching up at the 16000 point level before breaking out in the previous session as it tried to make a run for the end of 2023 highs at 17000 points with the downtrend line broken. Price action looked like turning this falling wedge pattern into something more bullish but is still looking like a dead cat bounce instead:
Meanwhile Japanese stock markets are starting the trading week in fine form with the Nikkei 225 launching more than 2% higher to close at 38525 points.
Price action had been indicating a rounding top on the daily chart with daily momentum retracing away from overbought readings with the breakout last month above the 40000 point level almost in full remission. Short term support was broken on this retracement, with futures indicating a small pullback in line with Wall Street so this could be a tough road to climb back:
Australian stocks were able to put on some solid gains to start the week on a good note with the ASX200 closing 0.8% higher at 7989 points.
SPI futures are down 0.7% so most of that will likely be taken back on the open following the mixed finish on Wall Street overnight. The daily chart was showing a potential bearish head and shoulders pattern forming with ATR daily support tentatively broken, taking price action back to the February support levels in mid April. Momentum has retraced fully from being overbought so this could be a false breakout that spreads into a proper rout:
European markets just can’t getting any traction with another poor start to the trading week as continental stocks fell back as the Eurostoxx 50 Index closed 1% lower to 4815 points.
The daily chart shows price action off trend after breaching the early December 4600 point highs with daily momentum retracing well into an oversold phase. This was looking to turn into a larger breakout with support at the 4900 point level quite firm with resistance still looming at the 5000 point barrier. Former ATR support at the 4900 point level remains the anchor point but as I said I was wary of this one off move and it looks like another downtrend:
Wall Street was initially buoyant but some poor earnings results (yay Macca’s!) and fear over the coming week of volatility stopped the party with the NASDAQ barely up while the S&P500 also lifted just 0.1% to 5463 points.
The four hourly chart showed resistance overhead that had been tested last Friday before an early week slump that has now been tested and broken through, helped alongside a previously soaring NASDAQ. Momentum was somewhat oversold but has not yet returned to positive settings and and weekly support levels are still being threatened here:
Currency markets are starting to moderate in volatility with all eyes on the upcoming central bank meetings as the USD firmed overnight against almost everything but in wishy washy style. Euro pushed further below the 1.09 handle as it tries to find a bottom at the 1.08 level.
The union currency had previously bottomed out at the 1.07 level before gapping higher earlier in the week with more momentum building to the upside with the 1.0750 mid level as support but there is too much pressure here from King Dollar so watch for a further retracement as ATR support at the mid 1.08 handle has been taken out:
The USDJPY short term chart still looks like tumbling down a series of steps here although Yen was able to weaken ever so slightly overnight as the pair bounced back to the 154 level, getting back into slightly positive short term momentum territory.
This volatility speaks volumes as it once pushed aside the 158 level as longer term resistance, but then was unable to breach the 162 level as it looks like the BOJ intervention finally worked on the ever weakening Yen. With this short term bounce failing to get past short term resistance, more steps down are inevitable:
The Australian dollar continued to struggle and finished flat later in the session to remain just above the 65 handle as macro concerns re China and iron ore continue to take a toll.
During June the Pacific Peso hadn’t been able to take advantage of any USD weakness with momentum barely in the positive zone but that has changed in recent weeks with price action finally getting out of the mid 66 cent level that acted as a point of control. This looks dire with medium term support now broken:
Oil markets are failing to stabilise after have a solid run in the latter half of June with Brent crude’s breakdown on Friday night extending as the new trading week gets underway, almost closing below the $79USD per barrel level overnight.
After breaking out above the $83 level last month, price action had stalled above the $90 level awaiting new breakouts as daily momentum waned and then retraced back to neutral settings. Daily ATR support has now been broken with short term momentum now retracing into negative mode – watch out below:
Gold is trying to get back on track but another rebound overnight didn’t have legs as the weight of King Dollar is keeping it in check below the $2400USD per ounce level.
While it was the biggest casualty of the reaction to the US jobs report, the shiny metal was able to clock up some gains before this reversal, almost hitting the $2500USD per ounce level. The longer term support at the $2300 level remains key but the much stronger USD is very quickly turning the tide:
